Talking Linux IP with Bill Gates

If you could ask Bill Gates one question, what would you ask? I spent an hour today with Microsoft co-founder Bill Gates on the company’s Redmond campus. I chose to ask Bill about Microsoft’s intellectual property stance against Linux and its open source developers, from the SCO Group’s litigation against IBM to Steve Ballmer’s recent claim Linux infringes on Microsoft patents after signing a patent indemnity with Novell.

Bill Gates claimed he had never heard of BayStar Capital, an investor in SCO Group and their litigation against large corporate supporters of Linux. According to recent court documents BayStar founder and managing member Larry Goldfarb claims Microsoft wished to promote SCO Group through independent investors such as Baystar, backing a $50 million investment with supposed guarantees from Microsoft.

Last month Microsoft CEO claimed Linux uses Microsoft “patented intellectual property” and Microsoft shareholders deserve an “appropriate economic return for our patented innovation.” The statement seemed like an attempt to create fear and uncertainty in the Linux market, so I asked Gates about the new interest in patent swaps with open source operating systems. Gates claimed patent cross-licensing is common practice in the software industry, protecting companies who indemnify their users from software risks.

While I didn’t get a rundown of each piece of the Linux kernal Microsoft finds infringing, it does seem like Microsoft is just getting started with its intellectual property swaps and settlements with Linux corporations. Richard Stallman recently commented section 7 of GPL v2 does not come into play deals such as Microsoft-Novell. I think there is still a degree of IP uncertainty continually created around Linux and distributions with shareholders may seek partnerships.

Disclosure: I met with Gates as part of a small Microsoft event targeting 14 “web influentials” hosted in Redmond. Microsoft paid for my flight from San Francisco, two nights at a local hotel, and my meals for today.

Below is the full transcript of my brief conversation with Bill Gates. Microsoft asked me not to post the audio of the talk.

Transcript

Niall:

In the last month it’s been interesting to see the deal with Novell, and I know that was a big deal for Novell and Microsoft to come together. At the same time Steve [Ballmer] has been making patent assertions saying there are over 200 patent violations in the Linux kernel…

Bill:

Actually that’s not a number that comes from Microsoft..

Niall:

Right, that’s an OSRM number from two years ago.

Bill:

[Richard] Stallman gave a speech recently that used that number. I don’t know if he was quoting from the OSRM thing or what. Just judge for yourself. [Gates laughs briefly]

Niall:

OK. Two questions.

  1. Was Microsoft ever directly involved with the SCO Group in their lawsuit against IBM, either through BayStar Capital or others?
  2. Why is Microsoft recently choosing to go after supposed patent violations with various operating system companies?
Bill:

I don’t know BayStar.

Niall:

It’s an investment company. One of their executives testified Microsoft invested $50 million to offset SCO’s costs in the lawsuit.

Bill:

When?

Niall:

About a year ago. [Correction: Legal papers filed September 13, 2006]

Bill:

I don’t know anything about it. Is SCO still around? Are they still viable?

Niall:

The lawsuit didn’t go anywhere.

Bill:

What’s the latest? Is SCO still around?

Niall:

I think so.

Bill:

OK. I should look that up. Once upon a time SCO was a vibrant company and I certainly remember Larry Michels and all the guys who worked there. It’s not a name I’ve thought of for many many years.

Niall:

They are in Utah now I think.

Bill:

Wow, that’s a different place.

Niall:

So why the new interest in patent agreements with the different OS vendors? What’s going on?

Bill:

We’ve been doing patent cross-licenses for a long-time. It was a tradition in the computer industry and so we had to go out to all of those companies and give them value, so if they had some intellectual property we could get a license from them.

Digital Equipment, SGI, Hewlett-Packard, NCR, we had to do about 50 different agreements. IBM is the mother of them all, to get the cross-patent agreement with them.

I think because we had a flurry of those, about 10 years to get those basic cross-patent deals in place. I’m not sure if we’re at our peak on that or not. I know we did a ton because we indemnify our users. When you buy Microsoft software we say “hey, if there’s any patent problems, we indemnify you for that.” So we have to both protect enough of our own stuff and have enough licenses in that we can feel comfortable providing that for people.

We got some IP rights from Novell. Novell’s customers got some IP rights from us. It’s pretty normal stuff. The only thing that’s abnormal is open source companies hadn’t been involved in IP licensing and indemnification before. In terms of the commercial industry it’s business as usual.